Safeco Ins. Co. of America v. McGrath

• Decision Date: 28 October 1985
• Docket Number: No. 14286-1-I,14286-1-I
• Citation: 42 Wn.App. 58,708 P.2d 657
• Parties: SAFECO INSURANCE COMPANY OF AMERICA and General Insurance Company of America, Respondent, v. Thomas F. McGRATH, Jr. and Terrell C. McGrath, his wife; Frederick R. Hayes and Jane Doe Hayes, his wife; Judy A. Frounfelter and John Doe Frounfelter, her husband; Lumbermen's Mutual Casualty Company, a foreign insurance corporation; and Torbenson, Thatcher, McGrath, Treadwell and Schoonmaker, Inc., P.S., a Washington corporation, Appellants.
• Court: Washington Court of Appeals

Page 58

42 Wn.App. 58

708 P.2d 657

SAFECO INSURANCE COMPANY OF AMERICA and General Insurance Company of America, Respondent, v. Thomas F. McGRATH, Jr. and Terrell C. McGrath, his wife Frederick R. Hayes and Jane Doe Hayes, his wife; Judy A Frounfelter and John Doe Frounfelter, her husband Lumbermen's Mutual Casualty Company, a foreign insurance corporation; and Torbenson, Thatcher, McGrath, Treadwell and Schoonmaker, Inc., P.S., a Washington corporation, Appellants.

No. 14286-1-I.

Court of Appeals of Washington,

Division 1.

Oct. 28, 1985.

Culp, Dwyer, Guterson & Grader, William L. Dwyer, Kathleen Albrecht, Seattle, for appellants, Thomas F. McGrath Jr. and Terrell McGrath.

Schroeter, Goldmark & Bender, Leonard W. Schroeter, Seattle, for Frederick R. and Jane Doe Hayes and Judy A. and John Doe Frounfelter.

Keating, Bucklin & McCormack, P.S., Robert C. Keating, Seattle, for appellant, Lumbermens Mut. Cas. Co.

Lee, Smart, Cook, Martin & Patterson, P.S. Inc., John P. Cook, Seattle, for Torbenson, Thatcher, McGrath, Treadwell & Schoonmaker, Inc. P.S.

Helsell, Fetterman, Martin, Todd & Hokanson, Ralph J. Brindley, Seattle, for respondent, Safeco Ins. Co.

Lane, Powell, Moss & Miller, Thomas C. Sorenson, Seattle, for Farwest Services, Inc., d/b/a Reubens Plankhouse Restaurant and Grace Restaurant Co.

Merrick, Hofstedt & Lindsay, P.S., Sidney R. Snyder, Jr., Seattle, for Terrell C. McGrath.

Keller, Rohrback, Waldo, Hiscock, Butterworth & Fardal, Pinckney M. Rohrback, Seattle, for Thomas C. McGrath, Jr.

SWANSON, Judge.

Thomas F. McGrath, Jr. and Terrell C. McGrath, defendants in a pending personal injury action, and Frederick R. Hayes and Judy Frounfelter, plaintiffs in that action, appeal from a summary judgment order entered in a declaratory judgment action which determined that Safeco Insurance Company of America (Safeco) and Lumbermen's Mutual Casualty Company (Lumbermen's Mutual), McGrath's insurers, had no duty to defend or indemnify McGrath in the personal injury action. The basis for that ruling was essentially that McGrath's previous guilty plea to second degree assault in a criminal prosecution, which established that the victim's injuries were knowingly inflicted, operated by application of the doctrine of collateral estoppel to preclude any claim that McGrath's actions in causing injuries were not intentional or expected, actions excepted from coverage under the policies.

This litigation has its genesis in an altercation which occurred on February 12, 1980 in a Bellevue restaurant's parking lot. McGrath, while admittedly intoxicated, shot Hayes in the neck with a pistol. According to McGrath, Hayes was approaching him in a menacing fashion. McGrath contends that he acted in self-defense.

McGrath was charged with two counts of second degree assault with a firearm as a result of the shooting. Although McGrath claimed then, as he does here, that he shot in self-defense and while under the influence of alcohol, he agreed to plead guilty to one count of second degree assault, i.e., having knowingly inflicted grievous bodily harm, in exchange for dismissal of the second count of second degree assault and withdrawal of the firearm allegation which carried a mandatory 5-year prison term.

Thereafter, in 1981, Hayes and Frounfelter, a companion of Hayes on the night of the shooting, filed a complaint alleging McGrath ¹ "did negligently, grossly negligently, recklessly and wantonly" cause them damages. McGrath tendered the defense of these civil actions to Safeco, his homeowner's insurer, Lumbermen's Mutual, his excess, personal casualty liability insurer, and General Insurance Company of America, the insurer of McGrath's law firm. The insurers declined the tender.

Safeco and General then filed a declaratory action seeking a judgment that they had no duty to defend and indemnify McGrath. In their complaint for declaratory relief, Safeco and General named as defendants appellant McGrath, his wife, his law firm, Hayes, Frounfelter, and Lumbermen's Mutual. By answer, counterclaim, and cross-claim, Lumbermen's Mutual also sought declaratory relief as to its duty to defend and indemnify McGrath.

The Safeco policy provided personal liability insurance for bodily injury or property damage resulting from an "occurrence", but excluded "bodily injury or property damage which is either expected or intended from the standpoint of the insured." An "occurrence" was defined as "an accident * * * which results * * * in bodily injury or property damage." The Lumbermen's Mutual policy insured McGrath against liability for personal injuries or property damage, but excluded "any act committed by or at the direction of the insured with intent to cause personal injury or property damage".

Subsequently, the personal injury cases and the declaratory judgment action were consolidated for discovery purposes. Before discovery was completed, both Safeco and Lumbermen's Mutual moved for summary judgment. ² The superior court granted both motions, decreeing that McGrath's guilty plea collaterally estopped him from claiming that the injuries were (1) a result of an "accident", within the meaning of the Safeco policy, (2) not "expected or intended from the standpoint of the insured" and, therefore, excluded from coverage under the Safeco policy, and (3) not "committed by or at the direction of the insured with intent to cause personal injury" and, therefore, excluded from coverage under the Lumbermen's Mutual policy. The superior court also determined that McGrath's actions "were intentional and not the result of a negligent act", and concluded that the insurance companies had no duty to defend or indemnify McGrath. This appeal followed.

Generally, an insurer's duty to defend its insured is broader than its duty to indemnify. An insurer's duty to defend its insured arises where any allegation in the complaint, if proved true, would render the insurer liable under the policy. State Farm Gen. Ins. Co. v. Emerson, 102 Wash.2d 477, 486, 687 P.2d 1139 (1984). An insurer's duty to indemnify its insured arises only where the injured party ultimately prevails on facts which fall within the policy coverage. An insurer has no duty to defend its insured, however, for acts specifically excluded from the policy. Harrison Plumbing & Heating, Inc. v. New Hampshire Ins. Group, 37 Wash.App. 621, 626, 681 P.2d 875 (1984). Therefore, if the doctrine of collateral estoppel is applicable in this case, thereby precluding relitigation of the issue of intent, neither Safeco nor Lumbermen's Mutual have the obligation to defend or indemnify McGrath.

In order for the doctrine of collateral estoppel to apply,

(1) the issue decided in the prior adjudication must be identical with the one presented in the second; (2) the prior adjudication must have ended in a final judgment on the merits; (3) the party against whom the plea of collateral estoppel is asserted must have been a party or in privity with a party to the prior litigation; and (4) application of the doctrine must not work an injustice. Lucas v. Velikanje, 2 Wn.App. 888, 894, 471 P.2d 103 (1970). Accord, Dunlap v. Wild, 22 Wn.App.. 583, 589-90, 591 P.2d 834 (1979).

Beagles v. Seattle-First Nat'l Bank, 25 Wash.App. 925, 929, 610 P.2d 962 (1980). See Rains v. State, 100 Wash.2d 660, 665, 674 P.2d 165 (1983).

There is little question that pleas of guilty to, and convictions of, felony charges are admissible in a subsequent civil action. ER 801(d)(2) and 803(a)(22). Further it has been held that the doctrine of collateral estoppel is applicable where defendants in civil cases have been previously convicted of criminal charges after a trial, Kyreacos v. Smith, 89 Wash.2d 425, 572 P.2d 723 (1977); Maicke v. RDH, Inc., 37 Wash.App. 750, 683 P.2d 227, rev. denied, 102 Wash.2d 1014 (1984); Seattle-First Nat'l Bank v. Cannon, 26 Wash.App. 922, 615 P.2d 1316 (1980), for indeed, they have had a "full and fair opportunity" to litigate the issues. Thus, application of the doctrine would not work an injustice under those circumstances.

The same cannot necessarily be said, however, where the criminal conviction is based on an Alford- ³ type guilty plea. A criminal defendant must contend with powerful, coercive forces when presented with a choice of either (a) certain, prolonged incarceration if he exercises his right to proceed to trial and is found guilty of the crimes charged in the information (here a mandatory 5-year prison term for conviction of second degree assault with a firearm (RCW 9.41.025)) or (b) a strong probability of a deferred or suspended sentence if he pleads guilty to a reduced charge (here the prosecutor promised to recommend deferred imposition of 10-year sentence conditioned on service of 1 year in jail, 6 months of which would be work release). Under such coercive circumstances, the policies underlying the application of the doctrine of collateral estoppel have not been met. That is, a criminal defendant has not had a "full and fair opportunity" to litigate the issues normally decided in a full-fledged criminal trial. Therefore, application of the doctrine would work an injustice under these facts.

This decision is in accord with a majority of jurisdictions which have considered the precise issue raised here. These courts have recognized a distinction between guilty pleas and convictions which were obtained following a trial and have refused to apply the doctrine of collateral estoppel where the defendant had pled guilty. ⁴ The reasoning underlying the distinction was aptly recognized by Justice Traynor who wrote for the unanimous California Supreme Court in Teitelbaum Furs, Inc. v. The Dominion Ins. Co., Ltd., 25 Cal.Rptr. 559, 561, 58 Cal.2d 601, 375 P.2d 439, 441 (1962), cert. denied, 372 U.S. 966, 83 S.Ct. 1091, 10 L.Ed.2d 130 (1963):

A plea of guilty is admissible in a subsequent civil...